21 Asian countries, including India, have signed an agreement to become the founding members of the Asian Infrastructure Investment Bank (AIIB). China’s Vice-Finance Minister Jin Liqun, who has also been the Vice-President of the Asian Development Bank (ADB), was appointed the Secretary General of AIIB.
China has been keen to ensure India’s participation in the AIIB, and the Chinese President Jinping also pushed for it when met PM Modi on the sidelines of the BRICS Summit in July. The AIIB is in addition to the BRICS Development Bank which was also formed recently. Te BRICS Development will be located in Shanghai, and will begin operating with an Indian as its President.
The Joint Secretary of the Economic Affairs division of the Ministry of Finance signed the MoU on behalf of India at Beijing. The Joint Secretary said that the new bank will function as a rich resource base for capital for infrastructure financing, and thereby provide an impetus to regional development by playing a complementary role to multilateral agencies such as the ADB and IMF.
Voting rights of the different countries will be decided after consultations among the members over fixing the bench marks which are expected to be a combination of GDP and PPP. If such a formula is finalized, India will be the second largest share holder of AIIB after China.
AIIB is an international financial institution that was proposed by China. It is expected to act as a balance of power with the WB, IMF and ADB all being controlled/dominated by the US, EU and Japan respectively.
The Headquarters of the AIIB will be at Beijing, and the bank is expected to be operational in 2015.
According to the agreement, the authorised capital of AIIB is US $100 bn and the initial subscribed capital is expected to be around US $50 bn. The paid-in ratio will be 20%.
The 21 members of the AIIB are China, India, Thailand, Malaysia, Singapore, the Philippines, Pakistan, Bangladesh, Brunei, Cambodia, Kazakhstan, Kuwait, Laos, Myanmar, Mongolia, Nepal, Oman, Qatar, Sri Lanka, Uzbekistan, and Vietnam.
The Centre has cleared 20 FDI proposals involving investment of approximately Rs. 988.3 cr.
The approvals to the 20 FDI proposals, including six in the pharmaceutical sector, were given by the Ministry of Finance after a meeting of the FIPB
Projects which were granted approval
- Tamil Nadu-based Equitas Holdings Pvt Ltd. will be bringing in the maximum investment with Rs. 325 cr
- Indusind Bank’s proposal, seeking to raise the foreign investment limit in the bank up to 74% has been approved
- Other proposals that have been approved are those by Fresenius Kabi Oncology for Rs. 119 cr and Amneal Pharmaceuticals Company’s for Rs. 205 cr
Proposals that were rejected
FIPB rejected multiple proposals including that of Sistema Shyam Teleservices Ltd. to increase foreign investment in the company up to 100%.
FIPB is a governmental body which offers a single window clearance for FDI proposals in India that are not allowed access through the automatic route. The members of the FIPB includes Secretaries of different ministries. The FIPB is headed by the Secretary of the Department of Economic Affairs of the Ministry of Finance.
FIPB provides recommendations to the Ministry of Finance on FDI proposals up to Rs. 1,200 cr. Proposals involving investment of more than Rs. 1,200 cr have to be approved by the Cabinet Committee on Economic Affairs (CCEA).
Contributions made by corporate towards Swachh Bharat Kosh and Clean Ganga Fund to be considered as social welfare spending under Companies Act
The government has widened the ambit of CSR under the new Companies Act to include contributions made towards the Swachh Bharat Kosh (SBK) and the Clean Ganga Fund (CGF).
The contributions will count as being made for social welfare work.
Changes to the Companies Act
Companies having at least Rs 5 cr net profit, or Rs 1,000 cr turnover, or Rs 500 cr net worth have to spend a minimum of 2% of their three year average annual net profit towards CSR from 2014-15. Schedule VII of Companies Act, 2013, lists the activities and endeavors that can count as CSR.
The Corporate Affairs Ministry has inserted the words ‘including contribution to the Swachh Bharat Kosh set up by the central government for the promotion of sanitation’ and ‘including contribution to the Swach Bharat Kosh set up by the central government for the promotion of sanitation’ in Schedule VII of the Act through a notification.
Earlier, contributions made to the Prime Minister’s National Relief Fund was also included under Schedule VII. Any other fund set up by the Central Government for socio-economic development and relief and welfare of the Scheduled Castes, the Scheduled Tribes, other backward classes, minorities and women was also included under the schedule.
Swachh Bharat Kosh (SBK)
SBK was set up to attract CSR funds from the corporate sector and contributions from individuals and philanthropists. The funds accumulated in the SBK will be utilized to achieve the objective of Clean India or Swachh Bharat by 2019 through Swachh Bharat Mission.
Clean Ganga Fund (CGF)
The CGF was constituted to fund activities to clean and conserve the river, Ganga. The CGF also accepts voluntary contributions from NRIs and PIOs towards the CGF
The CGF will be managed by a Trust to be headed by the finance minister. The Secretariat of the Trust will be set up in the Ministry of Water Resources.